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HKU Guest Lecture Corporate Finance

The global Corporate Finance market has developed dynamically in 2015 so far, mainly driven by M&A. According to Dealogic the global M&A volume reached $3.0tr as of August 2015, the second fastest to the $3tr mark on record behind 2007. This guest lecture at the University of Hong Kong sets out to show basics of Corporate Finance and latest market trends.

2.
Corporate Finance: Solutions & International Market Developments | University of Hong Kong, 15 September 2015
About corpfina
The Corporate Finance Association
(corpfina) e.V. was founded in 2013
as an international association to
• foster interdisciplinary exchange of the
international corporate finance
community across all sectors.
• further develop standards and early
address trends in corporate finance.
• foster new scientific and practical
findings in regards to corporate finance.
• intensify the dialogue between public,
politicians and international rule-setting
institutions regarding corporate finance.
Authori-
ties
Issuers /
Corporates
Banks /
Advisors
Analysts /
Media
Investors

5.
Corporate Finance: Solutions & International Market Developments | University of Hong Kong, 15 September 2015
Focus on M&A
Mergers & Acquisitions is inorganic growth (i.e. increasing output and business
reach) or downsizing through a share or asset deal.
Asset deal
- Purchase of objects
- All or selected assets of the target are being purchased
- Unusual for common transactions, standard for
distressed M&A, i.e. purchases out of insolvencies (all
assets are being purchased without any liabilities)
- Main advantages: not all assets and liabilities need to be
purchased, higher potential for write-offs for the buyer
- Main disadvantages: high complexity given that all
purchased assets have to be identified; transfer of
contracts requires consent of contracting partners
Share deal
- Purchase of rights
- All or selected shares of the target are being purchased
- Main advantages: Complexity significantly reduced
compared to asset deal (only transfer of shares); no
consent of contracting partners required; licenses / official
permissions don´t cease to exist
- Main disadvantages: Debt can´t be separeted and left
behind; company can only be purchased as a whole –
selection of certain assets impossible

6.
Corporate Finance: Solutions & International Market Developments | University of Hong Kong, 15 September 2015
Focus on Equity Capital Markets
Equity is non-repayable capital, not interest-bearing and subordinated compared
to debt positions in case of the insolvency of the company/issuer.
IPO
Follow-on
Convertible
Equity-linked
note; listed bond can
or must be converted into
new shares at maturity
Increase of the
share capital
with or without
subscription rights
Issuance of shares
on the stock
markets for the first
time

9.
Corporate Finance: Solutions & International Market Developments | University of Hong Kong, 15 September 2015
Recent International Market Developments
The Corporate Finance World Market has developed dynamically in 2015
so far, mainly driven by M&A*.
• Global M&A volume reached $3.0tr as of August 2015, the second fastest to the $3tr mark
on record, behind 2007 when it was reached on 23 July.
• Global high yield DCM average deal size stands at $587m as of August 2015, up 19% from
$493m (yoy), and the highest YTD average on record.
• Global corporate loans volume stood at $1.54tr in 1H 2015, down 18% on the $1.87tr
borrowed in 1H 2014 and was the lowest first half volume since 1H 2012.
*Source: Dealogic